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Sovereignty, exchange rate and the Euro crisis

Author

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  • Bresser-Pereira, Luiz Carlos
  • Rossi, Pedro

Abstract

This paper presents an interpretation of the European crisis based on the balance of payments imbalances within the Eurozone and highlighting the role of the 'internal' real exchange rates as a primary cause of the crisis. It explores the structural contradictions that turn the Euro into a 'foreign currency' for each individual Eurozone country. These contradictions imply the inability of national central banks to monetize the public and private debts, which makes the Euro crisis a sovereign crisis similar to those typical of emerging countries, but whose solution presents additional obstacles.

Suggested Citation

  • Bresser-Pereira, Luiz Carlos & Rossi, Pedro, 2014. "Sovereignty, exchange rate and the Euro crisis," Textos para discussão 371, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    • Handle: RePEc:fgv:eesptd:371
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    References listed on IDEAS

    as
    1. Se-Eun Jeong & Jacques Mazier & Jamel Saadaoui, 2010. "Exchange Rate Misalignments at World and European Levels: a FEER Approach," International Economics, CEPII research center, issue 121, pages 25-58.
    2. Luiz Bresser-Pereira & Paulo Gala, 2009. "Why Foreign Savings Fail to Cause Growth," International Journal of Political Economy, Taylor & Francis Journals, vol. 38(3), pages 58-76.
    3. Bordo, Michael & James, Harold, 2014. "The European Crisis in the Context of the History of Previous Financial Crises," Journal of Macroeconomics, Elsevier, vol. 39(PB), pages 275-284.
    4. Sebastian Dullien & Barbara Fritz & Laurissa Mühlich, 2013. "Regional Monetary Cooperation: Lessons from the Euro Crisis for Developing Areas?," World Economic Review, World Economics Association, vol. 2013(2), pages 1-1, February.
    5. Hein, Eckhard, 2012. "Finance-dominated capitalism, re-distribution and the financial and economic crises - a European perspective," MPRA Paper 35903, University Library of Munich, Germany.
    6. Goodhart, Charles A. E., 1998. "The two concepts of money: implications for the analysis of optimal currency areas," European Journal of Political Economy, Elsevier, vol. 14(3), pages 407-432, August.
    7. Luiz Bresser-Pereira, 2012. "Summing Up Structuralist Development Macroeconomics and New Developmentalism," Challenge, Taylor & Francis Journals, vol. 55(5), pages 59-78.
    8. Bresser-Pereira, Luiz Carlos, 2014. "The access to demand," Textos para discussão 366, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
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